testimony

May 30, 2007

We heard today from two security guards that testified Conrad Black removed boxes from his Toronto office after a judge ordered him not to. A video security tape showed Black and his chauffeur loading the boxes into his limo. The highlight of the tape was seeing Conrad point to the security cameras as he made his way down the stairs at 10 Toronto Street.

Monique Delorme, controller for Hollinger Inc. also testified regarding the boxes and the court order not to remove any documents from the building.

Next was a real estate appraiser, Jonathan Miller, who gave expert testimony and concluded that there was no way the Park Avenue apartment Black purchased was worth only $3 million. (He said the 2nd floor apartment was in fact worth $8.5 million. The smaller apartment he swapped was worth $5.2 million, he said. Both values were based on the renovated apartments.)

The judge entered the courtroom this morning and we knew something was up. She was not her perky usual self. She said she wanted to see all the lawyers in her chambers pronto.

They convened for about 20 minutes - highly unusual for this judge who prides herself on starting on time.

This started what was a boring and tedious day. There were 8 sidebars in addition to the lawyers conference by 3:15. It seemed the defense was very skittish about the videotape and appraiser and were constantly jumping up asking for sidebars.

And on top of that, the courtroom was humid. Probably because the building had been closed for the long weekend. But us reporters thought maybe we were being punished. We figured the judge was upset that someone (the prosecution? the defense?) leaked a sealed document to one reporter- a document that resulted in an article in the National Post in which it is revealed that Judge Amy St. Eve has had it with his lordship and suggests the defense muzzle their client.

We debated this over lunch. If in fact the Judge admonished the defense during a sidebar and said they should get Black to stop talking why was that sealed? There are court reporters during sidebars and the conversation becomes part of the transcript.

Could it be that this hard-working judge is not only perky and cute but also controlling?

Wednesday we are expected to see an IRS agent and then on to the defense's case with the Joan Maida, Black's personal assistant.

May 24, 2007

Prosecutor Ed Siskel elicited a couple of key tidbits before turning over Paul Healy, the former head of investor relations to Ed Genson for cross examination.

Healy revealed that business tycoon Donald Trump who had spoken to a Hollinger shareholders meeting in support of Conrad Black in 2003 had done so as a favor to Black. On Tuesday, the court heard an audio recording of the meeting in which Trump introduced himself as a stockholder (he was not - he had obtained a proxy for the meeting) and then provided a glowing endorsement of both Black and Hollinger during a contentious stock holders meeting.

In a memo to Trump, Black wrote that some of stockholders were planning "an insurrection" and expected to pack the room with complaints.

"Could I ask you a rather esoteric favor?" Black wrote in the memo. "If you were able to put in a cameo appearance and say a supportive word, I'm sure it would have an impact on the group and be favorably noted in the press."

Healy also reported that after he had met with the special committee investigating Hollinger, he received a call from David Radler asking if he had "ratted him out."

Ed Genson in his cross-examination spent time trying to show that with $4,5 million in unreimbursed renovations to the New York apartment, that Black did not cheat the company by underpaying for the apartment.

Genson went over Healy's testimony from Tuesday in which he admitted he lied in a memo that said the New York apartment listed at $3 million was fair market value.

"You lied," Genson said.

"Yes," Healy answered.

"You testified that this was an 'intentional mistake' - that's lying," Genson said.

"Yes," Healy replied. "It was not my best moment."

Later, Genson questioned Healy's story that Black asked him to write the memo stating that the apartment was listed at fair market value.

"A financially independent man (the court learned that Healy is comfortable financially) - who makes a half a million dollars a year - who stood up to Conrad Black - (we should believe) that he made you do it?" Genson asked.

Pat Tuite, attorney for Jack Boultbee began his cross of Healy in the afternoon. Tuite asked for names of the real estate agents that Healy said he consulted about the price of the apartment. Healy had told the court yesterday that he has friends in the real estate business and that he consulted them about pricing Black's New York apartment- but Healy said he could not remember their names.

Tuite provided lists of brokers from two firms that Healy said may have been the firms he called but Healy was unable to find the brokers names.

Tuite asked if Healy could have his Rolodex sent to Chicago he was admonished by the judge for doing so in front of the jury. The defense has requested Healy's Rolodex.

May 23, 2007

Healy inflicted some damage yesterday. After playing a tape of a Hollinger stockholder's meeting from May 2002, a contentious meeting where concerns were raised about non-compete payments and management fees that were paid to Black and Radler, we learned that despite Healy's pleas for Conrad to report back to Hollinger directors who missed the meeting he did not. Black only informed the directors that investors were not happy they missed the meeting but gave them the impression all went well.

Later Healy pleaded with David Radler and Mark Kipnis to inform Gov. Thompson and others about "what really went down," but they did not.

A very angry Conrad Black then chastised Healy and told him he had overstepped his bounds. Healy said Black told him that "It is my company and I will decide what the governor needs to know!"

Healy also told the jury that he refused to post a message on a Yahoo Internet finance site regarding Hollinger stock, citing SEC regulations.

"Paul, don't be so strait-laced," Black told Healy in an email. Put it on from someone else, put it on anonymously. "

Later Healy said, Black posted the message himself, anonymously.

Healy also told about a meeting with prospective investors who asked about Black's use of corporate airplanes. Healy said Black responded with "I can have a 747 if I want."

Healy also testified that in preparation for shareholder's meeting in 2003, when printing the proxy release, instead of a 100 page document, an 800 page document was printed which included exhibits not usually filed.

"It included exhibits not usually filed," Healy said. "And raised the ire of shareholders and made its way to the press.

Another tape of the following year's shareholder's meeting (May 2003) was played and we heard Black playing damage control. The rest of that tape will be played when court resumes on Wednesday.

Theresa Tedesco reports today in the National Post that co-defendants are becoming uneasy with Conrad Black's loose tongue.

May 22, 2007

Paul Healy, the head of investor relations for Hollinger International began his testimony today. We learned early on that he has been granted immunity by the court.

"I am compelled to be here and testify," Healy said. So long as I tell the truth, nothing can be used against me." Healy then told the jury if he gave false testimony, he would face criminal charges.

It didn't take long to find out what Healy could have been charged with - his part in the false valuation of two Park Avenue apartments - one owned by Hollinger, the other by Conrad Black.

Healy said he let Conrad know that shareholders were not pleased about the company's purchase of a $3 million apartment in 1994, at a time when Hollinger's cash flow was only $100 million. When Conrad planned $2 million in renovations, he told Healy that he would pay for the renovations himself. And although Conrad said later he would buy the apartment, Boultbee told Healy Conrad didn't have the money.

Conrad did buy a smaller apartment in 1998 in the same building at 635 Park Ave. in Manhattan -" a service apartment" to house executives and other who worked for Hollinger. This apartment cost $499,000 and Hollinger paid $1.4 million in renovations.

After the Can West deal closed and Healy "became aware Conrad came into a large amount of money in the form of a non-compete," he suggested Conrad buy the apartment.

"I congratulated him on Can West and said now would be a good time to get the apartment off the books," Healy said. "He (Conrad) agreed."

Healy said he was delighted and Conrad said "the deal's at cost."

Now the court saw why Healy needed immunity.

Conrad wanted to pay what Hollinger paid for the apartment in 1994 - when Healy reminded him the proxy statement says the apartment can be sold "for fair market value," Conrad emphatically told Healy "no it's cost."

In essence, Conrad bought the $3million apartment for $3million and sold the ground floor apartment that he paid $499,000 in 1994 for $850,000 in 1998. That means the larger apartment never appreciated and the smaller appreciated 70%.

Healy's part in all of this was to concoct statements that after consulting with real estate professionals that the apartments had been appraised when in fact they were not.

Healy told the court there was no in-depth discussion of real estate, no justification for the $3 million price tag and no basis for the $850,000 price for the ground floor apartment.

When asked if these were false statements, Healy (who must have gone to the David Radler school of rationalization) answered, "It would be an intentional mistake." Even the jury laughed at that answer.

During his testimony, Jack Boultbee was implicated in the apartment swap deal as well. When Healy reported to Boultbee that Conrad said the deal was at cost, not fair market value as Hollinger's contract demands, Boultbee said "yep, yep, yep that's right."

At the end of the day, after the jury was dismissed, the lawyers fought over what portions of a videotaped stockholders meeting they will be allowed to see as Theresa Tedesco reports in the National Post.

Judge Amy St. Eve will rule in the morning. The judge also on Monday refused one sidebar and said " I don't want a sidebar for every objection or we will be here in September."

May 17, 2007

Ron Safer did a spectacular job yesterday raking David Radler through the coals. By the time he had finished, it was clear that his client Mark Kipnis, the in-house counsel for Hollinger, who is seated at the defense table all for just a $100,000 bonus, in fact earned that amount for work done in the sale of Hollinger newspapers.

As Safer grilled Radler, he asked him if he had panicked when he realized that the audit committee had signed and approved the non-compete payments for the 10K disclosure the, with his voice rising said,"The jig was up - your scheme had been disclosed!"

And when Radler responded "Sir, they signed them did they not," Conrad Black was smiling - not trying just to conceal a smile, but smiling. And Barbara Amiel Black was almost giddy.

For more on the yesterday's goings on - I defer to my esteemed colleague Peter Worthington, who as usual, says it so well.

There will be an interesting piece of business when court resumes Thursday - the Judge is expected to rule on whether or not to let two witnesses testify that Black lied to shareholders - as Mary Vallis and Theresa Tedesco report for Can West News Can West News Service

May 16, 2007

Up until now, those of us at ringside in the courtroom have seen Gus Newman, the 80-year-old lawyer representing Jack Boultbee, as the curmudgeonly, likable lawyer with the booming voice and New York accent who is always entertaining. (Today, for example, he asked for a sidebar and came back and said, "Despite my age, I learned something here, that's why we call it the practice of law")

But today we saw so much more -we saw his brilliance at work. And work it did.

After he got a hold of David Radler in cross-examination, it was clear as the sun rising each morning - this man is truly a liar.

I noticed when Newman began his cross on Monday that Radler's demeanor was different on the stand. Radler looked more comfortable, answered questions more quickly and clearly seemed to be trusting Newman. I assumed now we would see a Radler who is more off-guard - a Radler who would eventually trip himself up.

As Newman asked Radler to recall his meetings with the special investigative committee, Radler evaded almost every question. Here's a sampling of Radler's answers:

"Sir, I would have to look (at the document)"

"There's more to it."

"I'm not going to say no because its something I believed in."

"I can't answer because there is no leeway to explain it."

"I would rather explain, and I don't think you'd be unhappy (if I did)"

"I can't answer, I don't know the time period."

"I can't answer because you won't let me verbalize it."

"I cannot answer yes or no, your honor."

"That's too broad a question, sir."

"I said that but it was out of context."

And my personal favorite, when asked if any savvy buyer would have demanded Hollinger Inc. and Ravelston have non-compete agreements - "I would have to have the definition of savvy."

He also sometimes answered with, "I was there to tell the truth."

Instead of saying he was lying, he used this euphemism: "I was in my rationalization phase."

And at one point he stammered with an answer and then blurted out, much like a game show contestant, "I am going to say yes!"

You get the picture. By the time Mr. Newman was finished with him I was waiting for someone to ask Radler "What is your name?" and he would answer "I need to check with my mother."

When Newman asked if Radler learned from Mark Kipnis, the Hollinger attorney if the law firm Torys and accounting firm KPMG were aware of the "template" i.e the plan that 25% of all non-compete payments would be paid to Hollinger Inc. Radler answered, "I would rather say that Kipnis told me KPMG and Torys were in the room - thats as far as i can go."

But when Newman reminded Radler that he told the government on a meeting June 16, 2005 that he said Kipnis told him that Torys and KMPG did not object to the 25% - 75% plan, and asked Radler if that was the truth, Radler said yes.

Now, Newman, in his booming voice asked Radler, "Do you wnat to correct your testimony that the only thing you told the government (in the June 2005 meeting) is that Kipnis was in the room?"

This was a pivotal moment. I thought at the moment that perhaps Radler had blown his deal with the prosecution. And later, Judge Amy St. Eve who over and over had told Radler to answer only the question and not elaborate also asked Radler's attorney before a break to take his client aside and remind him to answer questions.

Clearly, the defense table was happy. Clearly, the prosecutors were not. And for the first time I have witnessed, Conrad was smiling.

May 15, 2007

Score one for the defense. Greenspan finally showed the jury David Radler the liar.

First thing Monday morning, Radler was tripped up- in testimony from last week - he said he never reviewed his testimony with the Hollinger special investigation but Greenspan reminded him that on May 9, when asked "Did you review your statements with the prosecution to get ready for the trial" he had answered answered yes. He elaborated with "my answer should not have been yes - I never read it" - "it was a misinterpretation" and also played a semantics game with "depends on how you define review."

Greenspan then asked Radler if he knew about the Canadian rule of parole - the 1-6 rule - that he would be released after 6 months for a 20 month sentence.

"No, I didn't know that but I am happy to hear that," Radler answered.

And that in the U.S., one serves 85% - or 25 of 29 months.

"Surely you must know that," Greenspan said.

No, Radler said.

"I think I'm going to send you a bill, Greenspan responded.

With that Greenspan asked if Radler knew that Ferndale, a Canadian prison had farm raised cattle and golf therapy.

"As a non-golfer, it won't help me much," Radler said.

Greenspan asked if Radler realized that of all the deals he has made, this is the greatest deal of his lifetime.

"I don't believe going to prison is a great deal," Radler said.

With that, the cool, collected Radler we saw last week disappeared, replaced with a Radler that appeared angry, dejected and well, rattled.

"It is easy for you to lie, is it not," Greenspan said.

"I don't believe I have to answer that,"Radler answered.

"Your honor will decide, or Mr. Sussman will decide to object," Greenspan shot back. And that comment led to the first of many sidebars yesterday.

Greenspan pointed out that there is not a paper trail from Radler - not an email, memo, fax that corroborates his story. Not one memo that says to insert themselves into the non-compete agreements. Not one, most importantly, that connects Conrad Black, Greenspan said.

The only thing the jury has, Greenspan said is "Your word" and later said "the word of a self-confessed liar (to which Radler said, I told lies at times, yes.)

At one point, Eric Sussman jumped up and objected with an added "the jury has more evidence."

We also saw an angry Judge Amy St. Eve who before the noon break admonished the lawyers, particularly Sussman.

She told Sussman that his repeatedly jumping up with "there is no good faith basis" in front of the jury is "wrong and improper." She said it is fine to argue but to do it at sidebar.

"I will not tolerate this, " she said.

Greenspan exposed Vee Holdings Ltd. - a trust that was David Radler's. but that had Tod Vogt's name - a shell company to hide holdings from his partner, Conrad Black. Greenspan then told how in a previous Canadian trial (Winkler) Radler had lied about having only a 24% voting interest in Horizon when in fact he had more.

The jury now saw a David Radler that had lied under oath ot a jury. Greenspan finally looked relaxed.

Gus Newman began his cross in the afternoon. Radler appeared more relaxed - Newman has a much more cordial way than Greenspan. Radler appeared to answer more quickly - perhaps, I thought, being more off-guard, we may see Radler walk into a trap.

May 09, 2007

The prosecution was banking on David Radler to connect the dots and yesterday it all came together. A confident Radler took the stand and walked us through three newspaper sales at the core of the case. He admitted that the buyers of the newspapers never demanded the non-compete agreements that the defense claims they did. He admitted it was all a plan - a plan devised by Conrad Black himself.

The plan - that 25% of all non-compete payments would be paid to Hollinger Inc. became known as "the template," Radler said. And it was ordered by "Toronto" which became code for the senior executives of Hollinger - meaning Black, Boultbee and Atkinson.

"I didn't know if the transaction was legal or illegal," Radler said. "But I didn't like the transaction. I should have said something. I regret I didn't. The "I regret i didn't" was met with the defense jumping up in objection and those words were stricken by the judge.

"As an officer of Inc. did you have any intention of competing?" prosecutor Sussman asked.?

"No," Radler answered.

It was about this time that Conrad appeared a little pale.

Why?

"Because it would be like competing against one's self," Radler replied referring to the Horizon transaction. Black and Radler own a portion of Horizon.

"Did you ever present $1.2 million (in non-competes) to the Hollinger audit committee for approval?"

"No."

"Did Conrad present $1.2 million to the board?"

"No."

Did Mr. Atkinson?

"No."

"Did Mr. Boultbee?"

"No."

And so it went. The pieces were all linked together. After seven weeks in the courtroom the pieces of the puzzle came together. Or did they?

The defense team is drooling in anticipation. I did a dozen radio interviews for various Canadian radio stations after court today and they all asked -"What's will the defense do?"

I answered they will come out with everything they've got. That we saw a brutal Greenspan whack around Governor Thompson, Marie-Josee Kravis and Richard Burt but that we aint seen nothing yet.

My good friend Steven Skurka, a Canadian criminal attorney and television legal analyst has some astute observations in his blog The Crime Sheet today. Court adjourned early today so the defense could go through the boxes that Conrad removed from his office against a court order - Steven noted that Radler was seen going back into court with his attorneys and there was "trouble in Dodge city."

Steven suggests "the first cracks in Radler’s suntanned shell finally began to be exposed."

May 02, 2007

"Big Jim" as Gov. James Thompson is known in these parts, looked rather small today. Greenspan began his cross-examination and in the first moments, when Thompson did not know which page was being referred to, Greenspan admonished the Governor almost like a schoolboy, "Were you not following what I was reading?"

When Greenspan suggested that Thompson, as chairman of the audit committee was a "gatekeeper" and that Thompson should have, as an audit committee member, looked more closely at documents than a board member, Thompson replied,"I wouldn't say, more closely - I look first and then report to the board."

The operative word of the day was "skimmed." The governor said over and over no, I didn't read it, I skimmed it."

He skimmed draft financials. He skimmed SEC filings. He skimmed memos. He skimmed footnotes of financials and filings.

In all he skimmed 11 documents that authorized $80 million in non-compete fees to Conrad Black and the three defendants.

"Yes, I should have read them but I skimmed them the governor said."

"Is there some kind of skimming school?" Greenspan asked?

"Yes, I skimmed the 10 K"

"I said, Mr. Greenspan, I skimmed this"

"Skimming is reading? Greenspan asked?

"Skimming is a form of reading," Thompson answered.

"I missed it because I was skimming that document"

"I skimmed the document, sir,"

"I didn't see I didn't read it - I said I skimmed it."

"Sir, if you skim a document you don't exhibit preference for one part or another," Thompson said.

And so it went.

Greenspan asked if it wasn't a remarkable coincidence that he and fellow audit committee members Marie-Josee Kravis and Richard Burt missed critical passages 11 times. He did not wait for an answer.

"I am going to suggest to you governor that you approved all these things, and when there was some criticism all of you conveniently forgot,"Greenspan said.

A humiliating day for a man who was governor of the State of Illinois for 14 years.

An interesting footnote. Seated in the courtroom today was Anton Kerner, the son of the late Otto Kerner, who was governor of the State of Illinois from 1961-1968. Kerner was convicted in 1973 of 17 counts of bribery, conspiracy, perjury and other charges. The prosecutor was James Thompson.